Financial Stability Committees: An Institutional Response to New Challenges

The recent financial crisis has highlighted the need to complement in a more integral fashion the micro-prudential approach to financial regulation and supervision with a proper assessment of systemic risks. Thus, there has been more emphasis in considering a macro-prudential approach for the design of the prudential policies and governance of the regulatory and supervisory authorities to achieve financial stability. We suggest a series of principles that should govern the design of rules and institutions, and argue that Financial Stability Committees are adequate institutional responses to face current challenges. In particular, they turn financial safety nets into financial stability nets that contribute and reinforce micro and macro-prudential perspectives.